2023 set to be more ‘normal’ for cruise sector – but the pandemic has driven underlying changes
In a recent insight for the shipping industry, Clarksons Research has profiled the recovering activity levels in the cruise market. Clarksons Research managing director Steve Gordon said, “The cruise industry was shipping’s hardest hit sector during the Covid pandemic but is now seeing improving activity levels after a hugely challenging period for cruise operators.”
He pointed out key insights: cruise fleet activity, measured by daily ports calls, have edged above pre-Covid-19 levels for the first time in recent weeks. In 2020, more than 90% of the cruise fleet was idle, with port calls activity only recovering to 40% of pre-Covid-19 levels in 2021 and to 87% in 2022.
Meanwhile, recovering activity has focused on North America and the Caribbean (port callings above pre-Covid-19 levels) while activity in Asia remains 40% down with a pick up in Chinese activity expected from June.
Mr Gordon added, “Improvements in passenger numbers have lagged due to lower occupancy rates but, following reports of robust booking volumes in recent months, we are projecting 30M passengers across 2023, marginally exceeding 2019 volumes (passenger volumes in 2020 and 2021 averaged only 5M per year). We are projecting the potential for passenger volumes of 40M by 2028.”
There are today 488 cruise vessels with 674,000-berth capacity. “Since the start of the pandemic, 40 cruise vessels have been sold for recycling but fleet capacity has begun to grow again and we project it will be 20% larger than the pre-Covid-19 fleet by start 2025 (729,000 berths versus 614,000 berths),” said Mr Gordon.
Elsewhere, the pre-Covid-19 build programme continues to deliver from European yards, but some of the longer-term investment plans for large cruise vessels have been scaled back.
Cruise operator bond market raises have totalled US$45Bn since the start of Covid-19.
Clarksons Research’s insight said its tracking of daily cruise port calls provides a clear view of the scale of the impact from the Covid pandemic on the industry, and the subsequent restart. After activity virtually came to a halt in Q2 2020 with more than 90% of the fleet idle, port calls started to increase through 2021 as some ships returned to service. The insight said further gains were seen in 2022, with port calls running on average 13% below 2019 levels, before edging ahead of pre-Covid levels in recent weeks for the first time. Improvements in passenger volumes have lagged vessel activity, with ships typically sailing with lower occupancy than pre-Covid (2022 average by major operators: circa 80%, versus 100% in 2019). However, occupancy is also gradually increasing (circa 98% in Q1 2023), while operators have reported robust booking volumes over recent months.
Clarkson Research’s insight highlights how the pandemic has impacted the global fleet: the pace of cruise vessel refurbishments has halved versus pre-Covid, approximately 40 ships have been recycled since 2020, more than in the previous 10 years, while elevated secondhand sales have continued, with 10% of fleet capacity having changed hands since 2020.
The focus of newbuilding interest has shifted to smaller expedition and luxury units, while adoption of green technology continues amid efforts to decarbonise. Clarksons Research said 9% of fleet capacity and 65% of the orderbook is alternative-fuel capable, and more than 25% of the fleet is fitted with an energy-saving technology.
Cruise Insight May summed up, “Recent years have certainly been dramatic for the cruise industry. While some impacts from the pandemic linger, and the underlying landscape continues to evolve, operators will be encouraged that 2023 is shaping up to be a much more normal year overall.”
Sign up for Riviera’s series of technical and operational webinars and conferences in 2023:
© 2023 Riviera Maritime Media Ltd.